Bid-proof fund
AT least nobody can take over Rowntree in order to raid the £250 million or more in its pension fund. Such takeover bids are made, though not publicly admitted. Buy a company with a surplus on its pension fund, merge that fund with your company's — and you can afford to stop paying contributions and thus boost your profits, or, more simply, jack up your own salary and thus your pension entitlement, using the surplus to fund it. Rowntree's, though, is not a conventional pension fund. It is what is called a money purchase scheme, which means that the benefits are tied, not to final salary, but to contributions. What each Rowntree pensioner, actual and prospective, gets out of it is what the pensioner and the company put into it, and what the investment managers then make of it. Nobody can take it away. The pension fund industry defends the conven- tional salary-related scheme by arguing that it protects the beneficiary from his own lack of foresight and the need to provide for inflation. Rowntree, though, a provident and conscientious employer in anybody's book, has shown that a money purchase scheme can still protect its benefi- ciaries against that danger. It protects them against other dangers, from the raider from outside and the redistributors within from the constant thrust of cross-subsidy between one beneficiary and another, with the same people so often acting as judges and jurymen and plaintiffs and trustees.
Previous page
